Putin stands by Ukraine loan offer; balks at pact

Tuesday

Jan 28, 2014 at 4:50 AM

BRUSSELS — President Vladimir Putin said Tuesday Russia will go ahead with a $15 billion bailout of Ukraine even if the opposition comes to power in Kiev, as long as the new government pursues economic policies the two sides agreed on.

BRUSSELS — President Vladimir Putin said Tuesday Russia will go ahead with a $15 billion bailout of Ukraine even if the opposition comes to power in Kiev, as long as the new government pursues economic policies the two sides agreed on.

Putin indicated that he would tolerate politicians with a pro-western bent in a new Ukrainian government while continuing to balk at a possible trade pact between Ukraine and the European Union as a threat to Russia’s manufacturing and agriculture industries.

"Are we going to review our loan and energy agreements if the opposition comes to power?" Putin told reporters after meeting with EU leaders in Brussels Tuesday. "We will not."

Putin sought to ease concern over Ukraine’s power struggle while demonstrating the leverage that Russia can exercise over its western neighbor by dictating gas prices and shoring up its public finances. Ukraine’s prime minister quit Tuesday and the parliament in Kiev repealed anti-demonstration laws.

The summit marked the latest episode in the East-West battle over Ukraine’s destiny that has been under way since the Soviet Union broke up in 1991. At one point, Ukraine was leaning west, after the Orange Revolution of 2004-05 promised democracy, closer ties with the EU and possible entry into the North Atlantic Treaty Organization.

Lately, Putin has regained the advantage. The Russian leader blunted NATO’s embrace of Ukraine in 2008, saw an ally installed as president in 2010, and in November headed off a EU-Ukraine trade accord by offering a better deal, in the form of bailout loans.

In Kiev, President Viktor Yanukovych made a concession to protesters braving sub-freezing temperatures in Maidan Square by accepting the resignation of the prime minister, Mykola Azarov. Lawmakers eased free-speech curbs, voting 361-2 to repeal anti-protest laws passed on Jan. 16. A ballot on an amnesty for jailed protesters was put off until tomorrow.

European Commission President Jose Barroso, speaking alongside Putin, saluted the "important steps to de-escalate the situation and to facilitate further steps through political dialogue toward a political solution."

Investors welcomed progress toward a peaceful resolution of the standoff, which the opposition says has left six protesters dead. The Interior Ministry said a policeman wounded on Jan. 27 died Tuesday.

Demonstrators continued to fill sand bags with ice to reinforce barricades in Kiev. With one EU envoy in the Ukrainian capital and another en route, Putin continued to bristle at what he called European interference in Ukraine’s domestic affairs. He said Russia’s foreign minister didn’t go to Athens to grandstand while European governments were arranging a bailout of debt-struck Greece in 2010.

"The more intermediaries there are, the more problems there are," Putin said. A European Parliament delegation is in Kiev this week, EU Enlargement Commissioner Stefan Fule was there Tuesday and EU foreign policy chief Catherine Ashton was scheduled to arrive later Tuesday.

Putin said a EU-Ukraine free-trade zone would damage Russia’s trade preferences, acting for example as "a backdoor effort to infiltrate our automotive market." EU officials said Putin agreed to at least examine whether that is so by setting up an expert panel to look at the economic consequences of EU trade ties with former Soviet states.

Russian aid is contingent on Ukraine’s "future economic strategy," Putin said. "The most important thing for us is that the Ukrainian economy be creditworthy, that it be able to produce a positive effect from its development, that the government undertake structural reforms and that we have a guarantee that the loan will be repaid."

Noting NAK Naftogaz Ukrainy’s debt to Russia, which amounts to $2.7 billion since August, Putin said that Ukraine is now asking to defer payments for gas received "this year" at reduced prices. "We will try to reduce some of this debt by reducing prices on gas and deferring payments," he said.

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